# Unit Economics Analysis: [Business or segment name]

> Analysis of the economics of one unit of the business (a customer, a
> subscription, an order or a location): revenue per unit, variable
> cost and contribution, customer acquisition cost (CAC) by channel,
> retention by cohort, customer lifetime value (LTV), payback period,
> sensitivities and the actions that follow. Written as original
> practice guidance for finance, growth and investor teams; no
> accounting standard defines these measures, so each one must carry
> its own definition. Where unit metrics are published as key
> performance indicators, the SEC Commission Guidance on MD&A (Release
> 33-10751, 2020) sets expectations on definition, reason for use and
> consistency. Measures that are non-GAAP financial measures or
> alternative performance measures (for example contribution or
> adjusted margins) also fall under SEC Regulation G (17 CFR Part 244)
> and the ESMA Guidelines ESMA/2015/1415; operating and statistical
> measures such as customer counts and churn rates do not. Requirements are
> referenced by number; obtain the rule for the normative text. Replace
> every `[bracketed]` value and every row marked *Example*. This is a
> document format, not financial, investment, tax, legal or accounting
> advice.

<!--
Guidance: How to use this template
- Use it to answer one question: does each additional unit we sell
  create value after the cost of acquiring and serving it, and how
  quickly is the acquisition cost repaid?
- Fill section 2 (unit definition and conventions) first. Most errors in
  unit economics come from mixing definitions: revenue instead of
  margin, logo churn instead of revenue churn, paid-only instead of
  fully loaded CAC.
- Reconcile the unit totals to the income statement (section 10) so the
  analysis cannot drift away from the accounts.
- The worked example uses the fictional Corvid Commerce Group (SaaS
  retailer, IFRS reporter, functional currency EUR, financial year =
  calendar year). It analyses two units: a subscription customer and a
  commerce order, on FY2026 actuals, with implications for the FY2027
  budget in Annual Budget (`finance/annual-budget`). Amounts are EUR
  thousand per customer for subscription and EUR per order for commerce,
  unless stated.
- Related documents: Monthly Management Report
  (`finance/monthly-management-report`), Rolling Forecast
  (`finance/rolling-forecast`), Variance Analysis
  (`finance/variance-analysis`), Financial Model Specification
  (`finance/financial-model-specification`), Investment Appraisal
  (`finance/investment-appraisal`), Metric Definition
  (`data/metric-definition`), Board Deck (`startup/board-deck`),
  Investor Update (`startup/investor-update`), Lean Canvas
  (`business/lean-canvas`).
-->

## Document control

<!-- Guidance: Record the data period, the source systems and the definitions version, so the analysis can be refreshed and compared with the previous one. Pitfall: comparing this quarter's LTV with last quarter's when the churn definition changed in between. -->

| Field | Value |
|---|---|
| Document ID | [UEA-YYYY-NN] *Example:* UEA-2027-01 |
| Business or segment | [Segment] *Example:* Corvid Commerce Group: subscription platform and commerce |
| Units analysed | [Customer / subscription / order / store] *Example:* subscription customer (merchant account); commerce order |
| Data period | [YYYY-MM-DD to YYYY-MM-DD] *Example:* 2026-01-01 to 2026-12-31 (FY2026 actuals), cohorts from 2024-01-01 |
| Currency and units | [EUR], per-unit amounts as stated in each table |
| Data sources | [Billing system], [CRM], [General ledger], [Marketing spend ledger] |
| Definitions version | [Metric definition IDs and version] |
| Version | [1.0] |
| Status | [Draft / In review / Approved] |
| Owner | [@head-of-fpa] |
| Contributors | [@growth-lead], [@revenue-operations], [@commerce-director] |
| Approvers/reviewers | [@cfo], [@cro] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential: internal] |
| Related documents | [Budget], [Rolling forecast], [Pricing paper] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Head of FP&A (preparer) | [@name] | [Submitted] | YYYY-MM-DD |
| Chief Revenue Officer (definitions and data) | [@name] | [Agreed] | YYYY-MM-DD |
| Chief Financial Officer | [@name] | [Approved] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | Data extract and definitions |
| 0.9 | YYYY-MM-DD | [@name] | *Example:* Reconciled to FY2026 ledger, sensitivities added |
| 1.0 | YYYY-MM-DD | [@name] | *Example:* Approved; targets fed into FY2027 budget |

## Contents

<!-- Guidance: Keep this list aligned with the headings. -->

1. [Summary and conclusions](#1-summary-and-conclusions)
2. [Business model, unit definition and conventions](#2-business-model-unit-definition-and-conventions)
3. [Revenue per unit](#3-revenue-per-unit)
4. [Variable cost and contribution](#4-variable-cost-and-contribution)
5. [Customer acquisition cost by channel](#5-customer-acquisition-cost-by-channel)
6. [Retention and cohorts](#6-retention-and-cohorts)
7. [Lifetime value](#7-lifetime-value)
8. [Payback period](#8-payback-period)
9. [Sensitivities and scenarios](#9-sensitivities-and-scenarios)
10. [Reconciliation to the financial statements](#10-reconciliation-to-the-financial-statements)
11. [Actions and targets](#11-actions-and-targets)
12. [Data quality and limitations](#12-data-quality-and-limitations)
13. [Glossary and references](#13-glossary-and-references)

## 1. Summary and conclusions

<!-- Guidance: Five lines a board member can act on: the ratio, the payback, the trend, the weakest segment or channel, and the decision you recommend. Pitfall: leading with an LTV figure without saying how it was calculated, which invites false precision. -->

| Unit | Contribution per unit | CAC | LTV (5-year, discounted) | LTV / CAC | Payback | Verdict |
|---|---|---|---|---|---|---|
| Subscription customer *(Example)* | EUR 9.75k per year | EUR 15.6k | EUR 36.97k | 2.37x | 19.2 months | Creates value; keep investing within channel limits |
| Commerce new customer *(Example)* | EUR 8.55 per order | EUR 45.00 | EUR 33.40 (3-year) | 0.74x | Not repaid within 3 years | Destroys value at current CAC; reprice acquisition |

*Example conclusions:*

- A new subscription customer repays its acquisition cost in 19.2 months and returns 2.37 times its CAC over five years on a discounted basis (4.50 times without the five-year cap). The platform should keep investing in acquisition.
- Channels differ: partner and event channels repay in about 16 months; paid search takes 24 months and is the first channel to cap if budget tightens.
- A new commerce customer acquired through performance marketing at EUR 45 returns only EUR 33.40 of discounted contribution over three years. Commerce acquisition spend should be cut or redirected to consumables, where repeat purchase is higher.
- The FY2027 budget assumes subscription CAC of EUR 15.6k or less and commerce acquisition spend held flat; section 11 proposes a CAC ceiling of EUR 33 for commerce.

## 2. Business model, unit definition and conventions

<!-- Guidance: Describe how the business makes money, choose the unit that best represents one sale, and state every convention: period, currency, gross or net of discounts, logo or revenue churn, discount rate, horizon, treatment of expansion. Pitfall: a unit that mixes customers of very different sizes, so averages describe nobody. -->

### 2.1 Business model

[Describe the revenue streams, pricing model, sales motion and the cost structure.]

*Example:* Corvid sells a subscription commerce platform to merchants (annual contracts, billed annually in advance, priced per store and transaction tier) and runs its own online store for hardware and consumables. Subscription customers are acquired through paid search, a partner programme, outbound sales and events. Commerce customers are acquired mainly through performance marketing. Professional services (implementation) are sold with the platform and are not analysed as a separate unit.

### 2.2 Unit definitions

| ID | Unit | Definition | Counted when | Excluded |
|---|---|---|---|---|
| UNIT-001 *(Example)* | Subscription customer | A merchant legal entity with at least one active paid contract | Contract start date | Free trials, internal and partner demo accounts |
| UNIT-002 *(Example)* | Commerce order | A shipped order, net of cancellations before shipment | Shipment date | Replacement orders, staff orders |
| UNIT-003 *(Example)* | Commerce new customer | A customer placing a first order in the period, identified by email and payment instrument | First shipped order | Guest orders that cannot be matched |

### 2.3 Conventions

| Convention | Choice | Reason |
|---|---|---|
| Period *(Example)* | FY2026 actuals; cohorts by half-year of acquisition | Matches the budget cycle |
| Revenue basis | Net of discounts, credits and VAT | Consistent with reported revenue |
| Margin used | Contribution margin after all variable cost (not revenue, not gross margin) | Revenue-based LTV overstates value |
| Churn basis | Logo churn for LTV; gross and net ARR churn reported for context | Logo churn drives the count of paying units |
| Expansion | Excluded from base LTV; shown as a sensitivity | Conservative; expansion is concentrated in a few accounts |
| CAC basis | Fully loaded: media, sales and marketing staff, tools, agency, commissions | Paid-only CAC hides most of the cost |
| Discount rate | 10% per year (group hurdle rate for growth investment) | Same as Investment Appraisal (`finance/investment-appraisal`) |
| Horizon | 5 years for subscription; 3 years for commerce | Limits reliance on long-tail retention |
| Timing | Contribution received at the start of each subscription year (billed in advance); at the end of each commerce year | Matches billing |

## 3. Revenue per unit

<!-- Guidance: Show the average revenue per unit and its distribution, for new units and the installed base separately. Averages of very different populations mislead; segment by size or channel where the spread is wide. Pitfall: using the installed-base average for new customers, who usually start smaller. -->

### 3.1 Subscription

| Measure | Value | Calculation |
|---|---|---|
| Closing ARR 2026-12-31 *(Example)* | EUR 86,000k | Billing system |
| Closing customers | 4,000 | 3,600 opening + 600 new - 200 churned |
| ARR per customer, installed base | EUR 21.5k | 86,000 / 4,000 |
| Starting ARR per new customer (ARPA, new) | EUR 13.0k | New-customer ARR 7,800 / 600 |
| Median starting ARR per new customer | EUR 9.6k | Billing system; distribution is right-skewed |

FY2027 note: the FY2027 budget assumes larger new contracts (outbound and partner-led deals, plus the price action in UE-ACT-002), so its new ARR of EUR 14,500k comes from about 800 new customers at about EUR 18.1k each (Annual Budget ASM-007), and Q1 2027 delivered EUR 3,900k from 215 new customers (EUR 18.1k; Monthly Management Report section 2.1). This analysis uses FY2026 actuals at EUR 13.0k; refresh the LTV and payback figures on the FY2027 mix before using them to set FY2028 acquisition budgets.

### 3.2 ARR movement FY2026

| Step | EUR k |
|---|---|
| Opening ARR 2026-01-01 *(Example)* | 78,000 |
| New customers | 7,800 |
| Expansion | 3,600 |
| Contraction | (600) |
| Churn | (2,800) |
| **Closing ARR 2026-12-31** | **86,000** |

Gross ARR churn = (600 + 2,800) / 78,000 = 4.4%. Net revenue retention = (78,000 + 3,600 - 600 - 2,800) / 78,000 = 100.3%.

### 3.3 Commerce

| Measure | Value | Calculation |
|---|---|---|
| Commerce revenue FY2026 *(Example)* | EUR 50,000k | General ledger |
| Orders shipped | 1,111.1k | 50,000 / 45.00 |
| Average order value (AOV) | EUR 45.00 | Net of discounts and VAT |
| New customers | 140k | First order in FY2026 |
| Orders per new customer in the first 12 months | 2.4 | Order history for the 2025-H1 and 2025-H2 cohorts |

## 4. Variable cost and contribution

<!-- Guidance: Deduct every cost that rises with one more unit: cost of goods, hosting, payment fees, fulfilment, shipping, returns, onboarding, variable support. Leave out fixed cost and acquisition cost (handled in section 5). Pitfall: stopping at gross margin when material variable costs sit below the gross profit line. -->

### 4.1 Subscription customer, per year (new customer)

| Line | EUR k | % of ARPA |
|---|---|---|
| Starting ARR per new customer *(Example)* | 13.00 | 100.0% |
| Hosting and third-party software | (1.43) | (11.0%) |
| Payment processing | (0.26) | (2.0%) |
| Support (variable share) | (0.91) | (7.0%) |
| **Gross margin per customer** | **10.40** | **80.0%** |
| Customer success and onboarding (variable) | (0.65) | (5.0%) |
| **Contribution per customer per year (m)** | **9.75** | **75.0%** |

Check: 1.43 + 0.26 + 0.91 = 2.60 = 20% of 13.00; 10.40 - 0.65 = 9.75.

### 4.2 Commerce order

| Line | EUR per order | % of AOV |
|---|---|---|
| Average order value *(Example)* | 45.00 | 100.0% |
| Product cost | (26.10) | (58.0%) |
| Inbound freight and duties | (2.25) | (5.0%) |
| Fulfilment and pick-pack | (3.15) | (7.0%) |
| **Gross profit per order** | **13.50** | **30.0%** |
| Payment processing | (0.90) | (2.0%) |
| Outbound shipping not recovered | (2.70) | (6.0%) |
| Returns and refunds allowance | (1.35) | (3.0%) |
| **Contribution per order** | **8.55** | **19.0%** |

Check: 26.10 + 2.25 + 3.15 = 31.50; 45.00 - 31.50 = 13.50, the 30% gross margin used in the budget; 13.50 - 0.90 - 2.70 - 1.35 = 8.55.

Classification note: payment processing sits above gross margin for subscription (it is in subscription cost of sales in the ledger) but below gross profit for commerce (it is in commerce selling expense). The contribution figures are unaffected, but gross margins of the two units are not comparable line by line. Follow the ledger classification so section 10 reconciles, and state the difference wherever the two margins appear side by side.

$$
\text{Contribution per unit} = \text{Revenue per unit} - \text{Variable cost per unit}
$$

## 5. Customer acquisition cost by channel

<!-- Guidance: Divide fully loaded acquisition spend by the number of new units acquired in the same period, by channel. Allocate shared costs (brand, marketing operations) on a stated key. Pitfall: dividing this year's spend by this year's new customers when the sales cycle is longer than the period, so CAC moves with timing, not efficiency. -->

$$
\text{CAC} = \frac{\text{Acquisition spend (media, people, tools, commissions)}}{\text{New units acquired}}
$$

Allocation rules: [state how shared sales and marketing cost is split between acquisition, retention and brand]. *Example:* staff cost by time study; brand spend split 50/50 between acquisition and retention; account management and renewals excluded from CAC.

### 5.1 Subscription

| ID | Channel | Spend (EUR k) | New customers | CAC (EUR k) | Starting ARPA (EUR k) | Payback (months) |
|---|---|---|---|---|---|---|
| CH-001 *(Example)* | Paid search | 2,700 | 180 | 15.0 | 10.0 | 24.0 |
| CH-002 *(Example)* | Partner programme | 1,800 | 150 | 12.0 | 12.0 | 16.0 |
| CH-003 *(Example)* | Outbound sales | 3,910 | 170 | 23.0 | 19.0 | 19.4 |
| CH-004 *(Example)* | Events and content | 950 | 100 | 9.5 | 9.7 | 15.7 |
| **Total** | | **9,360** | **600** | **15.6** | **13.0** | **19.2** |

Checks: spend 2,700 + 1,800 + 3,910 + 950 = 9,360; 9,360 / 600 = 15.6; weighted ARPA (180 x 10.0 + 150 x 12.0 + 170 x 19.0 + 100 x 9.7) / 600 = 7,800 / 600 = 13.0. Payback uses the 75% contribution margin (section 8).

### 5.2 Commerce

| Item | Value |
|---|---|
| Performance marketing and agency fees *(Example)* | EUR 6,300k |
| New customers | 140k |
| **CAC per new customer** | **EUR 45.00** |

## 6. Retention and cohorts

<!-- Guidance: Group units by the period they were acquired and track how many remain (logo retention) and how much revenue remains (net revenue retention) at fixed ages. Cohorts reveal whether retention is improving or worsening, which a blended churn rate hides. Pitfall: mixing cohorts of different ages in one average, which flatters young businesses. -->

### 6.1 Subscription cohort logo retention

| Cohort (acquired) | Customers acquired | Month 6 | Month 12 | Month 18 | Month 24 | NRR at month 12 |
|---|---|---|---|---|---|---|
| 2024-H1 *(Example)* | 260 | 254 (97.7%) | 247 (95.0%) | 240 (92.3%) | 233 (89.6%) | 103% |
| 2024-H2 | 280 | 273 (97.5%) | 265 (94.6%) | 257 (91.8%) | 250 (89.3%) | 102% |
| 2025-H1 | 290 | 284 (97.9%) | 276 (95.2%) | 268 (92.4%) | Not yet reached | 103% |
| 2025-H2 | 300 | 292 (97.3%) | 284 (94.7%) | Not yet reached | Not yet reached | 101% |
| 2026-H1 | 290 | 283 (97.6%) | Not yet reached | Not yet reached | Not yet reached | Not yet reached |
| 2026-H2 | 310 | Not yet reached | Not yet reached | Not yet reached | Not yet reached | Not yet reached |

Reading: twelve-month logo retention is stable at about 95%, consistent with the annual logo churn used for LTV:

$$
\text{Annual logo churn } c = \frac{\text{Customers lost in the year}}{\text{Average customers}} = \frac{200}{(3{,}600 + 4{,}000)/2} = \frac{200}{3{,}800} = 5.26\%
$$

Retention rate r = 1 - c = 94.74%.

### 6.2 Commerce repeat purchase

| Cohort year | Orders per customer, year 1 | Share active in year 2 | Orders per active customer, year 2 | Share of year-2 actives active in year 3 | Orders per active customer, year 3 |
|---|---|---|---|---|---|
| 2024 *(Example)* | 2.4 | 45% | 3.0 | 60% | 3.0 |
| 2025 | 2.4 | 45% | 3.0 | Not yet reached | Not yet reached |

Expected orders per new customer: year 1 = 2.4; year 2 = 0.45 x 3.0 = 1.35; year 3 = 0.45 x 0.60 x 3.0 = 0.81; total 4.56 orders over three years.

```mermaid
flowchart LR
  A[New customer acquired<br/>CAC paid] --> B[Year 1 contribution]
  B --> C{Retained?}
  C -- yes, probability r --> D[Year 2 contribution]
  C -- no --> X[Lost]
  D --> E{Retained?}
  E -- yes --> F[Later years until horizon]
  E -- no --> X
  F --> G[Discounted sum = LTV]
```

## 7. Lifetime value

<!-- Guidance: LTV is the present value of the contribution a new unit is expected to generate over its life. Use contribution, not revenue; discount it; cap the horizon. Show the formula and every input so the reader can recompute it. Pitfall: the simple formula ARPA divided by churn, which ignores margin, discounting and the uncertainty of long tails. -->

### 7.1 Formulas

For contribution m received at the start of each year, retention r and discount rate d, the uncapped discounted lifetime value is:

$$
\text{LTV}_{\infty} = \sum_{t=0}^{\infty} \frac{m \, r^{t}}{(1+d)^{t}} = \frac{m\,(1+d)}{1+d-r}
$$

With a horizon of N years:

$$
\text{LTV}_{N} = \sum_{t=0}^{N-1} \frac{m \, r^{t}}{(1+d)^{t}}
$$

### 7.2 Subscription customer

Inputs: m = EUR 9.75k, r = 94.74%, d = 10%, N = 5.

| Year t | Expected contribution m x r^t (EUR k) | Discount factor 1 / 1.10^t | Present value (EUR k) |
|---|---|---|---|
| 0 *(Example)* | 9.75 | 1.0000 | 9.75 |
| 1 | 9.24 | 0.9091 | 8.40 |
| 2 | 8.75 | 0.8264 | 7.23 |
| 3 | 8.29 | 0.7513 | 6.23 |
| 4 | 7.85 | 0.6830 | 5.36 |
| **LTV, 5 years** | | | **36.97** |

Uncapped: LTV = 9.75 x 1.10 / (1.10 - 0.9474) = 10.725 / 0.1526 = EUR 70.27k. The five-year figure is the decision measure; the uncapped figure is shown for comparison with external benchmarks only.

$$
\frac{\text{LTV}_5}{\text{CAC}} = \frac{36.97}{15.6} = 2.37\text{x} \qquad \frac{\text{LTV}_{\infty}}{\text{CAC}} = \frac{70.27}{15.6} = 4.50\text{x}
$$

### 7.3 Commerce new customer

Contribution received at the end of each year, d = 10%, horizon 3 years.

| Year | Expected orders | Contribution (EUR, at 8.55 per order) | Discount factor | Present value (EUR) |
|---|---|---|---|---|
| 1 *(Example)* | 2.40 | 20.52 | 0.9091 | 18.65 |
| 2 | 1.35 | 11.54 | 0.8264 | 9.54 |
| 3 | 0.81 | 6.93 | 0.7513 | 5.20 |
| **Total** | **4.56** | **38.99** | | **33.40** |

LTV / CAC = 33.40 / 45.00 = 0.74x. Undiscounted, the ratio is 38.99 / 45.00 = 0.87x: even before the time value of money, a new commerce customer does not repay acquisition within three years.

## 8. Payback period

<!-- Guidance: Payback is the number of months of contribution needed to recover CAC. It is easier to communicate and less sensitive to long-tail assumptions than LTV, and it drives cash need. State whether you use gross margin or contribution margin. Pitfall: computing payback on revenue, which makes every channel look fast. -->

$$
\text{Payback (months)} = \frac{\text{CAC}}{\text{Monthly revenue per unit} \times \text{Contribution margin}} = \frac{15.6}{(13.0 / 12) \times 0.75} = \frac{15.6}{0.8125} = 19.2
$$

| Basis | Subscription payback (months) | Comment |
|---|---|---|
| Revenue only *(Example)* | 14.4 | 15.6 / (13.0 / 12); overstates speed, do not use |
| Gross margin (80%) | 18.0 | 15.6 / 0.8667 |
| Contribution margin (75%) | 19.2 | Decision basis |
| Contribution margin, adjusted for churn in year 2 | 19.6 | Months 13 to 19.2 earn 94.74% of contribution |

Churn-adjusted check: the first 12 months recover 12 x 0.8125 = 9.75; the remaining 5.85 is recovered at 0.8125 x 0.9474 = 0.7697 per month, taking 7.6 months, so payback = 19.6 months.

Commerce payback is not reached within the three-year horizon (cumulative undiscounted contribution EUR 38.99 against CAC EUR 45.00).

Cash implication: [state the working capital or funding needed while CAC is being repaid]. *Example:* annual billing in advance means the subscription customer pays EUR 13.0k on day one, so on a cash basis the first-year contribution of EUR 9.75k is received upfront and the second annual invoice (cumulative EUR 18.99k) repays CAC at month 12, against 19.2 months on an accrual basis; the 13-week and rolling forecasts use cash timing.

## 9. Sensitivities and scenarios

<!-- Guidance: Flex one input at a time, then combine the most likely adverse moves. Show the input level at which LTV / CAC falls to the hurdle (break-even CAC, break-even churn). Pitfall: sensitivities so small that every case looks acceptable. -->

### 9.1 Subscription, one input at a time

| ID | Change | m (EUR k) | LTV 5-year (EUR k) | LTV / CAC (5-year) | Payback (months) |
|---|---|---|---|---|---|
| SEN-000 *(Example)* | Base | 9.75 | 36.97 | 2.37x | 19.2 |
| SEN-001 *(Example)* | CAC +20% (EUR 18.72k) | 9.75 | 36.97 | 1.97x | 23.0 |
| SEN-002 *(Example)* | Logo churn +2 points (7.26%) | 9.75 | 35.67 | 2.29x | 19.2 |
| SEN-003 *(Example)* | Contribution margin -5 points (70%) | 9.10 | 34.51 | 2.21x | 20.6 |
| SEN-004 *(Example)* | Price +3% on new contracts (ARPA 13.39) | 10.04 | 38.08 | 2.44x | 18.6 |
| SEN-005 *(Example)* | Discount rate 12% | 9.75 | 35.87 | 2.30x | 19.2 |

Break-even CAC at an LTV / CAC hurdle of [1.5x] on the five-year basis: 36.97 / 1.5 = EUR 24.6k. Outbound sales (CH-003, CAC EUR 23.0k) is closest to the limit, but its larger starting ARPA keeps its own payback at 19.4 months.

### 9.2 Commerce

| ID | Change | LTV 3-year (EUR) | LTV / CAC | Comment |
|---|---|---|---|---|
| SEN-101 *(Example)* | Base | 33.40 | 0.74x | |
| SEN-102 *(Example)* | Year-2 activity 55% instead of 45% | 36.67 | 0.81x | Year 2 orders 1.65, year 3 0.99 |
| SEN-103 *(Example)* | Mix shift to consumables raises contribution to EUR 9.90 per order | 38.67 | 0.86x | 33.40 x 9.90 / 8.55 |
| SEN-104 *(Example)* | CAC cut to EUR 33.00 | 33.40 | 1.01x | Break-even CAC on discounted basis |
| SEN-105 *(Example)* | SEN-102 and SEN-103 combined, CAC EUR 33.00 | 42.46 | 1.29x | 36.67 x 9.90 / 8.55 |

Check for SEN-102: year 1: 20.52 / 1.10 = 18.65; year 2: 1.65 x 8.55 = 14.11, / 1.21 = 11.66; year 3: 0.99 x 8.55 = 8.46, / 1.331 = 6.36; total 36.67.

### 9.3 Scenario: combined downside

*Example:* subscription CAC +20% with churn +2 points: LTV 5-year EUR 35.67k / CAC EUR 18.72k = 1.91x, payback 23.0 months. Acquisition remains value-creating above the 1.5x hurdle but cash payback lengthens; the rolling forecast trigger on US churn (TRG-002 in `finance/rolling-forecast`) would pause US sales hiring before this point.

## 10. Reconciliation to the financial statements

<!-- Guidance: Multiply the unit metrics back up and compare them with the ledger. Differences above tolerance mean a definition or data problem. Pitfall: a unit analysis that nobody can tie to the income statement, which loses credibility with the board and investors. -->

| Item (EUR k) | From unit data | From ledger FY2026 | Difference | Explanation |
|---|---|---|---|---|
| Subscription revenue *(Example)* | 82,000 (average ARR (78,000 + 86,000) / 2) | 82,000 | 0 | Annual contracts recognised evenly |
| Subscription gross profit at 80% | 65,600 | 65,560 | 40 | Hosting credits, within tolerance |
| Commerce revenue | 50,000 (1,111.1k orders x EUR 45.00) | 50,000 | 0 | |
| Commerce gross profit at 30% | 15,000 | 14,900 | 100 | Inventory write-down outside unit cost |
| Acquisition spend, subscription and commerce | 15,660 (9,360 + 6,300) | Within sales and marketing 31,500 | n/a | Remaining 15,840 is brand, retention, account management and overhead |

Tolerance: [1% of the line or EUR 250k]. Investigate and explain anything above it before using the analysis.

If unit metrics are published (investor presentations, MD&A, prospectus), define each measure, explain why it is useful, keep the method consistent between periods and disclose any change; reconcile financial measures to the closest framework line item. Release 33-10751 sets the expectations for KPIs (definition, reason for use, consistency); measures that are non-GAAP financial measures or APMs, such as contribution or adjusted margins, also fall under SEC Regulation G for SEC registrants, including foreign private issuers subject to the 244.100(c) conditions, and under the ESMA APM Guidelines (paragraphs 20 to 44). Customer counts, churn rates and other operating or statistical measures are outside Regulation G (244.101(a)(2)) and the ESMA Guidelines (paragraph 19). Operating metrics are defined once in Metric Definition (`data/metric-definition`).

## 11. Actions and targets

<!-- Guidance: Turn the analysis into targets that feed the budget and forecast, with owners and the measure that will show progress. Pitfall: an analysis that ends at the ratio with no change to spend, pricing or product. -->

| ID | Action | Target measure | Target | Owner | Due | Feeds |
|---|---|---|---|---|---|---|
| UE-ACT-001 *(Example)* | Cap paid search spend at payback of 24 months; move 20% of its budget to the partner programme | Channel payback | 20 months or less blended | [@growth-lead] | 2027-03-31 | FY2027 marketing budget |
| UE-ACT-002 *(Example)* | Raise starting price on new contracts by 3% | Starting ARPA | EUR 13.4k | [@cro] | 2027-07-01 | Rolling forecast DRV-002 |
| UE-ACT-003 *(Example)* | Set a commerce CAC ceiling of EUR 33 and stop campaigns above it | Commerce CAC | EUR 33.00 or less | [@commerce-director] | 2027-02-28 | Commerce marketing plan |
| UE-ACT-004 *(Example)* | Launch a consumables subscription offer to lift repeat purchase | Year-2 activity | 55% | [@commerce-director] | 2027-06-30 | Commerce plan |
| UE-ACT-005 *(Example)* | Report cohort retention monthly in the management report | Cohort table refreshed | Monthly | [@head-of-fpa] | From MMR-2027-03 | `finance/monthly-management-report` |

Targets carried into Annual Budget (`finance/annual-budget`) and Rolling Forecast (`finance/rolling-forecast`) must use the same definitions as this analysis.

When you turn a ratio into a target, check that the owner can move it. A blended LTV to CAC target mixes pricing, retention and acquisition efficiency, which sit with different people; set the target on the component each owner controls (starting price, channel CAC, cohort retention) and keep the blended ratio as the outcome the executive team watches. Review the targets each time the cohort data is refreshed, and retire a target once the underlying behaviour has changed, for example after a move to larger contracts that changes the starting price for new customers. Document every target change in the revision history so that trends remain comparable.

## 12. Data quality and limitations

<!-- Guidance: Be explicit about what the data cannot tell you. Small cohorts, attribution models, changes in pricing and survivorship all bias unit metrics. Pitfall: reporting two decimal places on a metric built from a hundred customers. -->

| ID | Limitation | Effect | Mitigation |
|---|---|---|---|
| LIM-001 *(Example)* | Channel attribution uses last-touch | Overstates paid search, understates events | Compare with a position-based model yearly |
| LIM-002 *(Example)* | Cohorts after 2025-H2 have less than 12 months of history | Retention for recent cohorts is extrapolated | Show "Not yet reached" rather than estimates |
| LIM-003 *(Example)* | Expansion revenue excluded from LTV | LTV understated for large accounts | Sensitivity with expansion in the next refresh |
| LIM-004 *(Example)* | Commerce customer matching by email and card | Some repeat customers counted as new | Matching rate 92%; flagged in the data contract |
| LIM-005 *(Example)* | Fixed costs excluded by design | Positive contribution does not mean the segment is profitable | Read with segment results in the management report |

Data lineage, owners and quality checks for the source tables follow Data Contract (`data/data-contract`) and Data Quality Standard (`data/data-quality-standard`).

## 13. Glossary and references

<!-- Guidance: Define every term once and use it the same way throughout. -->

### 13.1 Glossary

| Term | Meaning in this template |
|---|---|
| AOV | Average order value, net of discounts and VAT |
| ARPA | Average revenue per account; here the starting ARR of a new customer |
| ARR | Annual recurring revenue: annualised value of active subscription contracts at a date |
| CAC | Customer acquisition cost: fully loaded acquisition spend divided by new units acquired |
| Cohort | Group of units acquired in the same period |
| Contribution | Revenue less all variable costs of serving the unit |
| Gross ARR churn | ARR lost through churn and contraction, divided by opening ARR |
| LTV | Lifetime value: discounted contribution expected from a new unit over the stated horizon |
| Logo churn | Customers lost in a period divided by average customers |
| Net revenue retention (NRR) | Opening-base ARR after expansion, contraction and churn, divided by opening ARR |
| Payback | Months of contribution needed to recover CAC |

### 13.2 References

| Reference | Version or date checked | Use |
|---|---|---|
| SEC Commission Guidance on MD&A, Release Nos. 33-10751 and 34-88094 | 2020-01-30, effective 2020-02-25, checked 2026-10-25 | Disclosure of key performance indicators and metrics |
| SEC Regulation G, 17 CFR Part 244 | Current eCFR text, checked 2026-10-25 | Non-GAAP financial measures for SEC registrants, including foreign private issuers; operating and statistical measures excluded (244.101(a)(2)) |
| ESMA Guidelines on Alternative Performance Measures, ESMA/2015/1415 | Dated 2015-10-05, applies from 2016-07-03 | Definition, reconciliation and consistency of APMs in the EU |
| [Group metric definitions] | [Version] | Definitions of ARR, customer, churn |
| [Marketing attribution policy] | [Version] | Channel allocation of spend |

## Standard and licence note

Structure aligned with common financial planning and growth analysis
practice for unit economics; no accounting standard defines CAC, LTV or
payback. Disclosure expectations are based on SEC Release 33-10751 and
SEC Regulation G (US public-domain works) and the ESMA Guidelines on
Alternative Performance Measures (ESMA/2015/1415, reused with
acknowledgement; this template is not endorsed by ESMA), paraphrased in
original words. Formulas are standard financial mathematics. Corvid
Commerce Group and every figure are fictional. This template is
original text written for this collection. Check the current official
versions of the cited rules before use. Template licence: MIT.